Download Market failure

Possible Essay


Use Exam style question text pg 6
“assess the case that the oligopoly market for
smartphone consumers may be in the best interest of
the consumers” 20 marks
Mark
scheme
Things to include

Pros
 Large
companies can invest in R&D – better phones
 Large companies have econs of scale – price lower?
 Monopsony power – could lower prices
Must be in context – draw from case study
 Cons
 Monopoly
power – price makers – higher price
 Less choice
Must be in context – draw from case study
 Evaluation – judgement must be made
Lesson Objectives



All students will understand the importance of
market power and market failure
Most students will be able to assess the
implications of market failure
Few students will understand the importance of
market failure on the economy
Market power

Question - What does this mean??
Market Power

Things to consider
 Monopoly
Power
 Price
maker
 Abnormal profit
 Monopsony
 Power
Power
over supplier
 Cartels
 Collusion
 Restrictive

practice
Barriers to entry; fixing prices; market rigging; bundling products
 Tacit
agreement
Power in labour Market

Monopsony and Monopoly power can be found
in labour markets
 How???
Power in labour Market


An employer that employs a significant % of a local
population could have power over them, e.g. large
factory or mine in a small town
Public Sector employees have power over ,
especially if have a strong trade union
 Case
study – Junior Doctors current dispute pg33
The implications of market failure


Imperfect Markets do not achieve Productive or
Allocative efficiency
Summarise Apple case study to help explain this –
pg34


Look at exam style Qc pg 34
Work in pairs to create a plan for this answer in
your note book